Since ERISA's enactment in 1974, employee benefit plans have grown in size, scope, number, cost and complexity. So too have the professional services needed to administer those plans.
To meet these needs, plan sponsors and administrators hire actuaries, accountants, attorneys, recordkeepers, custodians, institutional trustees, investment managers, brokers, investment consultants, disability consultants and other kinds of service providers. Often, an outside service provider handles matters of sizable economic consequence for the plan's participants or sponsor. When something goes wrong, the service provider becomes a potential target for litigation. This outline summarizes issues and tactical considerations in litigation brought against plan service providers.
POSSIBLE SOURCES OF GOVERNING LAW
When, and how, does ERISA regulate a service provider's conduct?
Part 4 of Title I of ERISA imposes duties and standards of conduct on a person to the extent that the person functions as a plan "fiduciary" within the meaning of ERISA § 3(21). In general, a person is a fiduciary to the extent that the person (i) manages plan assets, (ii) administers the plan, or (iii) gives investment advice for a fee. See 29 U.S.C. § 1002(21). Labor Department Interpretive Bulletin 75-5 takes the position that "attorneys, accountants, actuaries and consultants performing their usual professional functions will ordinarily not be considered fiduciaries" unless the facts and circumstances show that the professional has undertaken one of the three functions or roles that can make someone an ERISA fiduciary. 29 C.F.R. § 2509.75-5 (D-1).
Consistent with the Labor Department's Interpretive Bulletin, courts generally have declined to treat "licensed" professionals (e.g., attorneys, accountants, and actuaries) as ERISA fiduciaries, see, e.g., Custer v. Sweeney, 89 F.3d 1156 (4th Cir. 1996) (affirming dismissal of fiduciary liability claims against attorney); Painters of Phila. v. Price Waterhouse, 879 F.2d 1146 (3d Cir. 1989) (affirming dismissal of fiduciary liability claims against accountant); Gallagher Corp. v. Mass. Mutual Life Ins. Co., 105 F. Supp. 23 889 (N.D. Ill. 2000) (actuary not an ERISA fiduciary), absent extraordinary circumstances tending to show that the professional usurped a fiduciary function. Martin v. Feilen, 965 F.2d 660, 669 (8th Cir. 1992) (accountant functioned as fiduciary).